OBJECTIVES: Generic substitution may result in lower cost savings than expected, particularly for narrow therapeutic index products such as antiepileptic drugs (AEDs). Possible lower efficacy and adverse effects from generic substitution of AEDs may increase overall pharmacy utilization, thus counterbalancing per-pill savings. The objective of this study was to analyze the economic impact of government-mandated switching from branded to generic lamotrigine. METHODS: In a Canadian public payer pharmacy claims database, patients using branded lamotrigine in 2002 and converted to generic lamotrigine in 2003 were observed 1/2003 - 3/2006. For the generic period, the observed per-patient monthly drug costs were calculated as the sum of costs for lamotrigine, other AEDs and non-AEDs. Expected per-patient drug costs were estimated as the costs attributed to no change in lamotrigine dose, nor in other pharmacy utilization. Differences between observed and expected costs were compared. RESULTS: Among 1142 branded lamotrigine users, overall average monthly drug costs were expected to decrease by 16.4 percent due to lower pill costs. Instead, these costs fell by only 6.4 percent, from $186.46 during the brand period to $174.48 during the generic period. Because of dosage changes, lamotrigine costs decreased by 28.2%, instead of the anticipated 31.9%(p <0.001). Other AED costs increased by 18.5% rather than 1.1% (p <0.001), while non-AED drug cost increased by 25.1 percent rather than 6.4 % (p <0.001), due to increased pharmacy utilization. CONCLUSION: These significantly lower than expected drug cost reductions suggest that generic lamotrigine may be less effective than its branded counterpart and hence increases needs for other treatments. Payers should weigh the smaller than expected cost reduction against possible decrease in treatment effectiveness to determine the desirability of mandatory switching to generic lamotrigine.